Enel sanctioned to take WGC-5 in part and in whole

Deals

Russia’s Federal Antimonopoly Service (FAS) has sanctioned Italian Enel SpA to buy out 70% in Wholesale Generation Co.-5 (WGC-5). Given that Enel has accumulated nearly 30% in WGC-5, it will probably emerge as the only holder of the company. The news inspired investors at large – WGC-5 quotes soared 11% Friday.

FAS sanctioned Enel SpA to buy out 70.00028% in WGC-5, FAS representative Irina Romannikova said, pointing out the Italians were notified about the positive answer on August 16. So, Enel has a solid chance to emerge as the sole owner of WGC-5, where it has already consolidated a bit less than 30%. For this purpose, Enel may buy out stocks directly from the government or from minority holders. Enel became a co-owner of WGC-5 in June, once it bought out 25% from RAO UES of Russia, having paid the highest price in history of releasing new stocks by the generation companies of the country - $0.17 per a stock or $686 per a kilowatt of utility capacity. The price of the stake reached $1.5 billion, 15.6% above the market value. In the next effort, Enel expanded in WGC-5 to 29.9% by purchasing 4.9% on the market for $281 million ($0.16 a stock).

WGC-5 is one of the biggest generation companies of Russia. The installed capacity of its power plants – Konakovskaya, Reftinskaya, Nevinomysskaya and Sredneuralskaya – exceeds 8,700 MW. In October of 2006, WGC-5 released new stocks in size of 14.4% of increased capital; RAO UES of Russia generated $459 million as a result of that issue. The exact distribution of shares hasn’t been disclosed so far, though Finland’s Fortum and EBRD specified their stakes – 1.1% each. Off-the-record, the sources say Vneshekonombank, Gazprombank and NOVATEK are minority holders. RAO UES has 50%, Enel – 29.9%.

RAO UES will split off WGC-5 and TGC-5 on September 4. To be more precise, today’s ownership of RAO UES (50%) will be divided in two. The government will get 26% and transfer this stake to the balance of Russia’s Federal Property Agency, Rosimushchestvo, while the remaining 24% will be divided between minority holders pro rata their ownership. For Enel, another method to increase the stake is to make an offer to minority holders once it accumulates over 30% in WGC-5. (kommersant.com)

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